Agreed Value Insurance is a policy where you and the insurer agree on the value of a covered item. it is guaranteed that the item will be insured for that fixed amount in case of loss.
Because contract value insurance covers the full value of the property, it is commonly used to insure expensive and modified vehicles. An agreed-upon value policy offers a high degree of protection because a car’s age and depreciation won’t result in a lower payout, which most auto insurance policies do.
Reading: How does agreed value insurance work
This added value comes at a cost: quotes for agreed-upon value insurance are typically higher than for a standard policy, and you’ll need to have the car appraised before you buy coverage.
what is agreed value insurance?
Agreed value insurance policies have a maximum payment agreed upon by both the insured and the insurer when the policy is purchased. in case of damage or accident, the maximum payment is the agreed value. To determine the agreed value, the owners usually have to have the insured thing appraised and present said value to the insurance company. the insurer can also make its own assessment. agreed value insurance is often used for vintage or collector cars, which do not have a commonly stated value or are difficult to assess. some specialist insurers already have their own values for various vehicles, meaning there is no need for an appraisal in those cases. A few factors influence whether you may need an agreed value policy on your car:
The cost of an agreed value policy isn’t just based on the characteristics of the vehicle and the driver: each insurance company will often set its own terms and conditions, some of which are non-negotiable. For classic cars, common limits include:
when will you need agreed value insurance?
We recommend that you consider agreed-upon value insurance for items and vehicles whose value is high and difficult to pin down. An agreed value policy avoids any concern of the insurance company valuing the item differently from the owner by guaranteeing coverage at the agreed value.
reasons for obtaining agreed value coverage:
agreed value vs. declared value insurance
the agreed value insurance establishes the maximum coverage in the agreed number. Stated value insurance covers the lesser of the agreed value, sometimes called the declared value, and the actual cash value. actual cash value is the cost to replace the item and is sometimes called market value.
The key difference is that with a set value policy, you may not get the agreed number, even if you provided an appraisal in advance. For a high value or specialty auto, agreed value insurance has benefits over a stated value policy in that it provides greater peace of mind in the event of a claim. If you are considering declared value insurance, we recommend that you review the terms and coverage carefully to make sure the policy meets your needs.
agreed value vs. actual cash value
Actual cash value is the cost to replace an insured item, taking into account how age has reduced the value. Most auto insurance policies use actual cash value. The agreed value does not take into account the replacement cost or the age, but only an agreed value at the beginning of the policy.
who offers agreed value and classic car insurance?
Most agreed-upon auto insurance offers come from specialty companies that focus on classic, vintage, or modified vehicles. One company, Hagerty, markets its agreed value auto insurance policies as “guaranteed value.” however, some of the larger insurance companies also offer classic car policies, so you may be able to bundle your coverage.
The cost of agreed value insurance is often higher than the cost of a standard policy. Rates vary based on a wide range of factors, from the value of your vehicle to where it’s usually parked. however, the cost also varies significantly between insurers; For example, we found that quotes for a 1969 Dodge Charger, a more common classic car, appraised at $73,000 with a 6,000-mile annual limit, ranged from $492 to $1,425. Given this, we recommend that you compare quotes from several companies before purchasing coverage.
Agreed value insurance for jewelry, antiques and business property
In addition to high value cars, agreed value policies can be used on a variety of other valuables, including jewelry, rare musical instruments, antiques, and even buildings. For buildings, an agreed-upon value policy can be a way to avoid the use of coinsurance, which forces policyholders to share a portion of the risk if they insure less than the full value of a building. agreed value policies lock in the full value of the building, making coinsurance unnecessary.